**Exhibit **10.2

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**EMPLOYMENT AGREEMENT**

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THIS EMPLOYMENTAGREEMENT, (this “Agreement”), is made and entered into as of June 9,2005, by and between Mark Bonney (the “Executive”) and American BankNote Holographics, Inc., a Delaware corporation (the “Company”).

 

RECITAL

 

WHEREAS, the Company desires that the Executive beemployed to serve as its Executive Vice President, Chief Financial Officer andSecretary, and the Executive desires to be so employed by the Company, upon theterms and subject to the conditions set forth herein.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual promisesset forth in this Agreement and intending to be legally bound, the Executiveand the Company agree as follows:

 

# SECTION 1.      EMPLOYMENT.The Company hereby agrees to employ the Executive, and the Executive herebyaccepts such employment and agrees to render services to the Company, upon theterms and conditions set forth in this Agreement.

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# SECTION 2.      POSITIONAND DUTIES. The Executive shall assume the responsibilities and perform theduties of Executive Vice President and Chief Financial Officer of the Company,and shall report to the Chief Executive Officer of the Company.  The Executive shall be responsible for thefinancial management and financial reporting of the Company and shall alsoperform such duties and responsibilities assigned to him from time to time bythe Chief Executive Officer of the Company. The Executive agrees to devote substantially all of his business time,attention, skill and best efforts to the diligent performance of his dutieshereunder and shall be loyal to the Company and its affiliates andsubsidiaries, and use his best efforts to further their interests. TheExecutive shall not engage in any business activities (other than for theCompany) which would in any way affect his ability to perform his duties asfull time employee under this Agreement. The Company recognizes that theExecutive is a member of the board of directors of the Community Health Center, Inc.and the Angel Investor Forum, Inc., and the Company will permit Executiveto continue to serve on such board of directors, as long as such service isperformed by Executive essentially during evenings, weekends and/or Executive’svacation days; and such service does not conflict with any other obligation ofExecutive to the Company.  Executiveshall notify each of the entities of which he is a member of the board ofdirectors of his employment by the Company and shall substantially reduce histime commitment to such entities shortly following the execution of thisAgreement.  In the performance of hisduties, the Executive agrees to abide by and comply with all policies,practices, handbooks, procedures and guidelines which are now in effect orwhich the Company may adopt, modify, supplement or change from time to time.

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# SECTION 3.      TERMOF EMPLOYMENT. The term of employment hereunder shall commence on the datehereof and shall continue thereafter until the earlier of (i) one yearfrom the date hereof or (ii) termination pursuant to Section 9 hereof(the “Employment Term”). This

 

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# Agreement shall be automatically renewed annually forsuccessive one year terms, unless the Company gives written notice at leastsixty (60) days prior to the end of the Employment Term of its election toterminate such employment at the end of such Employment Term. Notwithstandingthe foregoing, if the Executive’s employment is terminated pursuant to Section 9of this Agreement, the automatic renewal provided herein shall be of no furthereffect as of the Termination Date (as defined herein). In the event theExecutive’s employment is not renewed at the end of the Employment Term (exceptas otherwise provided in Section 9 hereof), the Company will pay to theExecutive an amount equal to the Executive’s then existing Salary  (as defined) for the next six months inaccordance with the customary payroll practices of the Company and shall  continue all Benefits (as defined below) forsuch six-month period.

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# SECTION 4.      COMPENSATIONAND BENEFITS.

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## (a)           Salaryand Bonus. As compensation for the performance of the Executive’s serviceshereunder, during the Employment Term, the Company will pay to the Executive anannual base salary of not less than $215,000 per annum (the “Salary”).  In the event this Agreement is renewedpursuant to Section 3 above, the Salary may or may not be increased at thesole discretion of the Board of Directors (the “Board”), or a committeedesignated by the Board to make such determination (the “CompensationCommittee”), in consultation with the Chief Executive Officer.  The Executive will also be eligible toreceive a bonus each year (the “Bonus”). Within 30 days following the end of each fiscal year of the Company, thepayment of any Bonus (or no Bonus) shall be determined by the Board or theCompensation Committee in consultation with the Chief Executive Officer, andshall be based on the Executive’s and the Company’s performance against theobjectives to be determined by the Board or the Compensation Committee, inconsultation with the Chief Executive Officer at the beginning of each fiscalyear.  The Executive’s Salary and anyBonus will be payable in accordance with the customary payroll practices of theCompany for its senior management personnel.

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## (b)           Benefits.During the Employment Term, the Executive shall be eligible to participate, onthe same basis and subject to the same qualifications as other seniormanagement personnel of the Company, in any pension, profit sharing, savings,bonus, life insurance, health insurance, hospitalization, dental, drugprescription, disability, accidental death and dismemberment and other benefit plans and policies as may from time totime be in effect with respect to personnel of the Company (collectively, the “Benefits”).  The Executive shall also be entitled to vacationdays (including the right to accrue unused vacation time from year to year ifthe Agreement is renewed pursuant to Section 3 above), holidays and sickdays in accordance with the policies of the Company as may be in effect fromtime to time; provided, however, that upon termination of the Executive’semployment for any reason (including resignation by the Executive), the Companyshall pay the Executive for accrued vacation time unused as of the last date ofemployment, on a pro rated basis calculated on the basis of the Executive’sSalary in effect on the Termination Date. The Executive shall also be entitled to receive a car allowance of $700per month (inclusive of the cost of gas, tolls, repairs, insurance, maintenanceand other car related expenses).  Theparties anticipate the Executive will relocate his personal residence inconnection with his employment hereunder, and the Company shall reimburse theExecutive for all reasonable expenses specifically related to such relocation,subject to a maximum amount of $100,000, upon the submission of supportingdocumentation for such expenses. To the extent includible in income, thereimbursement of these relocation expenses will be grossed-up to

 

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## eliminate any federal or state tax consequence to theExecutive of his relocation. Until such time as the Executive relocates hispersonal residence and in no event longer than two years from the date hereof,the Company shall provide the Executive with a corporate apartment for use inconnection with his employment hereunder.

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## (c)           StockOptions. As additional compensation hereunder the Executive shall begranted stock options to purchase up to 112,500 shares of the Company’s commonstock, par value $.001 per share (the “Common Stock”) at an exerciseprice equal to the fair market value of the Common Stock on the date of thegrant, pursuant to any stock option plan or other equity incentive plan of theCompany (collectively, the “Plans”). Such options will vest as to 37,500 shares on each anniversary of thedate of grant, provided that the Executive remains employed by the Companythrough each such applicable anniversary date. The options and any shares of Common Stock underlying options may besubject to certain restrictions as disclosed in the  Plans. The Executive shall be eligible to receive subsequent grants of optionsto purchase equity in the Company during the Employment Term as determined,from time to time, in the sole discretion of the Board or the CompensationCommittee in consultation with the Chief Executive Officer.   In addition, the option to purchase 25,000shares of Common Stock granted to the Executive on February 19, 2003 andthe option to purchase 5,000 shares of Common Stock granted to the Executive onJanuary 7, 2005 shall remain outstanding during the Employment Term (butin no event beyond the expiration of stated terms thereof) and shall continueto vest in accordance with their terms during the Executive’s period ofemployment hereunder.

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## (d)           Expenses.The Company will pay or promptly reimburse the Executive for all reasonableout-of-pocket business, entertainment and travel expenses (other thancommutation expenses relating to the Executive’s travel from his residence tothe Company’s headquarters located at 2 Applegate Drive, Robbinsville, NJ08691) incurred by the Executive and approved by the Chief Executive Officer inthe performance of his duties hereunder upon presentation of appropriatesupporting documentation and otherwise in accordance with the expensereimbursement policies of the Company in effect from time to time.

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## (e)           Taxesand Withholdings. All appropriate deductions, including federal, state andlocal taxes and social security, shall be deducted from any amount paid by theCompany to the Executive hereunder in conformity with applicable laws.

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# SECTION 5.      CONFIDENTIALITY.  The Executive acknowledges and agrees that (a) inconnection with his employment by the Company, the Executive will be involvedin the Company’s and its subsidiaries’ (if any) operations; (b) in orderto permit him to carry out his responsibilities, the Company may disclose, tothe Executive, in strict confidence, or the Executive may develop, confidentialproprietary information and trade secrets of the Company and its affiliates,including without limitation (i) unpublished information with respect tothe Company concerning marketing or sales plans, operational techniques,strategic plans and the identity of suppliers and supply contacts; (ii) unpublishedfinancial information with respect to the Company, including informationconcerning revenues, profits and profit margins; (iii) internalconfidential manuals and memos; and (iv) “material inside information” assuch phrase is used for purposes of the Securities Exchange Act of 1934, asamended (collectively, “Confidential Information”); and (c) theCompany and its affiliates derive significant economic value and competitiveadvantage by reason of the fact that such Confidential Information, in

 

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# whole or in part, is not generally known or readilyascertainable by the Company’s or its affiliates’ actual or potentialcompetitors and, as such, constitutes the Company’s and its affiliates’valuable trade secrets.

#  

In addition to any obligations set forth herein, andin recognition of the foregoing acknowledgments, for himself and on behalf ofhis affiliates, the Executive agrees that during the Employment Term andthereafter he will not, directly or indirectly, use, disseminate or disclose,any Confidential Information (other than for the legitimate business purposesof the Company), and that he will not knowingly permit any of his affiliatesto, directly or indirectly, use, disseminate or disclose, any ConfidentialInformation. At the end of the Employment Term, the Executive agrees to deliverimmediately to the Company the originals and all copies of ConfidentialInformation in his possession or control, whether in written form, on computersor discs or otherwise, or evidence that any such Confidential Information hasbeen destroyed.

 

The restrictions set forth in this Section 5shall not apply to those particular portions of Confidential Information, ifany, that (a) have been published by any of the Company or any of itsaffiliates in a patent, article or other similar tangible publication; (b) isor becomes part of the public domain through no fault of the Executive; (c) whichwas in the Executive’s possession at the time of disclosure and was notacquired directly or indirectly from the Company; or (d) which wasreceived by a third party who did not receive such information from theCompany, and the third party did not require the Executive to maintain suchinformation as confidential.

 

The foregoing restrictions on the disclosure ofConfidential Information set forth in this Section 5 shall not apply tothose particular portions of Confidential Information, if any, that arerequired to be disclosed in connection with any legal process; provided that,at least ten (10) days in advance of any required disclosure, or suchlesser time as may be required by circumstances, the Executive shall furnishthe Company with a copy of the judicial or administrative order requiring thatsuch information be disclosed together with a written description of theinformation proposed to be disclosed (which description shall be in sufficientdetail to enable the Executive and its affiliates to determine the nature andscope of the information proposed to be disclosed), and the Executive covenantsand agrees to cooperate with the Company and its affiliates to deliver theminimum amount of information necessary to comply with such order.

 

This Section 5 shall survive any termination ofthis Agreement.

 

# SECTION 6.      COVENANTNOT TO COMPETE.

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## (a)           Scope.During the term of the Executive’s employment with the Company and for a periodof one year thereafter (the “Non-competition Period”), the Executiveshall not, in any jurisdiction where the Company has transacted business priorto the date the Executive ceases to be an employee of the Company, (i) performany managerial, sales, marketing or technical services directly or indirectlyfor any person or entity competing directly or indirectly with the Company orany of its subsidiaries in the holography business; (ii) perform any suchservices for any entity owned, directly or indirectly, by anyone competing,either directly or indirectly, with the Company or any of its subsidiaries inthe holography business; (iii) on his own behalf or that of any otherperson or entity, compete, either directly or indirectly, with the Company orany of its subsidiaries, to sell any products or services marketed or offeredby the

 

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## Company or any of its subsidiaries; or (iv) engageor become interested, directly or indirectly, as owner, employer, partner,consultant, through stock ownership (except ownership of less than one percentof the number of shares outstanding of any securities which are listed fortrading on any securities exchange, provided that the specific nature andamount of the investment, if over $50,000, shall be immediately disclosed tothe Company in writing), investment of capital, lending of money or property,or otherwise either alone or in association with others, in the operation ofany type of business or enterprise which conflicts or interferes with theperformance of the Executive’s services hereunder.

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## (b)           Remedies.The parties recognize, acknowledge and agree that (i) any breach or threatenedbreach of the provisions of this Section 6 shall cause irreparable harmand injury to the Company and that money damages will not provide an adequateremedy for such breach or threatened breach and (ii) the duration, scopeand geographical application of this Agreement are fair and reasonable underthe circumstances, and are reasonably required to protect the legitimatebusiness interests of the Company. Accordingly, the Executive agrees that theCompany shall be entitled to have the provisions of this Agreement specificallyenforced by any court having jurisdiction, and that such a court may issue atemporary restraining order, preliminary injunction or other appropriateequitable relief, without having to prove the inadequacy of available remediesat law. In addition, the Company shall be entitled to avail itself of all suchother actions and remedies available to it or any of its affiliates under lawor in equity and shall be entitled to such damages as it sustains by reason ofsuch breach or threatened breach. It is the express desire and intent of theparties that the provisions of this Agreement be enforced to the full extentpossible.

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## (c)           Severability.If any provision of Section 6(a) is held to be unenforceable becauseof the duration of such provision, the area covered thereby or the scope of theactivity restrained, the parties hereby expressly agree that the court makingsuch determination shall have the power to reduce the duration and/or areas ofsuch provision and/or the scope of the activity to be restrained contained insuch provision and, in its reduced form, such provision shall then beenforceable. The parties hereto intend and agree that the covenants containedin Section 6(a) shall be construed as a series of separate covenants,one for each municipality, community or county included within the areadesignated by Section 6(a). Except for geographic coverage, the terms andconditions of each such separate covenant shall be deemed identical to thecovenant contained in Section 6(a). Furthermore, if any court shall refuseto enforce any of the separate covenants deemed included in Section 6(a),then such unenforceable covenant shall be deemed eliminated from the provisionshereof to the extent necessary to permit the remaining separate covenants to beenforced in accordance with their terms. The prevailing party in any actionarising out of a dispute in respect of any provision of this Agreement shall beentitled to recover from the non-prevailing party reasonable attorneys’ feesand costs and disbursements incurred in connection with the prosecution ordefense, as the case may be, of any such action.

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# SECTION 7.      RESPONSIBILITYUPON TERMINATION. Upon the termination of his employment for any reason andirrespective of whether or not such termination is voluntary on his part:

 

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## (a)           TheExecutive shall advise the Company of the identity of his new employer withinten (10) days after accepting new employment and further agrees to keepthe Company so advised of any change in employment during the Non-competitionPeriod;

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## (b)           TheCompany in its sole discretion may notify any new employer of the Executivethat he has an obligation not to compete with the Company during theNon-competition Period; and

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## (c)           TheExecutive shall deliver to the Company any and all records, forms, contracts,memoranda, work papers, customer data and any other documents (whether inwritten form, on computers or discs or otherwise) which have come into hispossession by reason of his employment with the Company, irrespective ofwhether or not any of said documents were prepared for him, and he shall notretain memoranda in respect of or copies of any of said documents.

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# SECTION 8.      NONSOLICITATION.The Executive agrees that for a period of twelve (12) months after the date heceases to be an employee of the Company, he will not, and will not assist anyof his affiliates to, directly or indirectly, recruit or otherwise solicit orinduce any employee, customer, partner or supplier of the Company or any of itsaffiliates to terminate its relationship or arrangement with the Company or anyof its affiliates, otherwise change its relationship with the Company or any ofits affiliates, or establish any relationship with the foregoing or any of itsor their respective affiliates for any business purpose.

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# SECTION 9.      TERMINATION.

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## (a)           Terminationfor Cause. Notwithstanding anything contained herein to the contrary, theBoard may terminate the Executive’s employment with the Company for cause;provided that the Executive shall be given notice of the Company’s intent toterminate his employment for cause, the nature of the cause and, if curable, areasonable opportunity to remedy the cause. For the purposes of this Section 9(a),the term “reasonable” shall mean that amount of time deemed reasonable by theBoard acting in good faith and in light of the nature of the cause. Forpurposes of this Agreement, the term “cause” shall mean, the occurrence of anyone or more of the following (i) the commission of any act of theft orfraud on the part of the Executive against the Company, (ii) any act oromission which constitutes a material breach by the Executive of thisAgreement, including a refusal or failure by the Executive to perform hisduties and obligations hereunder, (iii) the Executive has been convictedof a crime, (iv) the Executive becomes Disabled (as hereinafter defined),or (v) the death of the Executive. For purposes of this Agreement, “Disabled”shall mean the Executive’s inability, due to illness, accident or any otherphysical or mental condition, to perform the essential functions of hisposition or this Agreement, with or without reasonable accommodation, for morethan 26 weeks consecutively or for intermittent periods aggregating 39 weeksduring any 78-week period during the Employment term, except as otherwiserequired by law.

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If, during the Employment Term the Company terminatesthe Executive’s employment pursuant to clauses (i), (ii), (iii), (iv) or (v) ofthis paragraph (a), then, from and after the date the Executive’s terminationis effective (the “Termination Date”), the Executive shall (a) haveno right to receive any further Salary following the Termination Date, (b) ceaseto be covered under

 

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or be permitted toparticipate in any Benefits (except payments due to the Executive or theExecutive’s beneficiaries or representatives under any applicable life ordisability insurance plans or policies) and (c) shall have no furtherright to purchase shares of the Company’s Common Stock pursuant to the Plans.

 

## (b)           TerminationWithout Cause and Resignation For Good Reason.  The Company shall have the right to terminatethis Agreement and the employment of the Executive with the Company for anyreason or no reason and without cause upon written notice to the Executive ofsuch termination, and the Executive shall have the right to resign for GoodReason (as hereinafter defined); provided that, except as otherwise provided inparagraph (c) below, (i) the Company shall continue to pay to theExecutive the Salary then in effect for six months following the TerminationDate, in accordance with the customary payroll practices of the Company for itssenior management personnel, provided that the Executive has executed anddelivered to the Company a general release in favor of the Company, effectiveupon the Executive’s last day of employment, (ii) the Company shallcontinue any benefits in which the Executive then participates on the samebasis of participation and subject to all terms and conditions of such plans asapplied prior to such termination or resignation and (iii) the Executiveshall be entitled to exercise any stock options granted under the Plans thathave vested as of the Termination Date for a period of nine months followingthe Termination Date.

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## (c)           TerminationUpon Change of Control or Resignation for Good Reason Following a Change ofControl. In the event the Executive’s employment is terminated by theCompany subsequent to a Change of Control (as hereinafter defined) or theExecutive resigns from the Company for Good Reason (as hereinafter defined) atany time following a Change of Control, the Company will pay the Executive aseverance amount, in one lump sum, within 30 days of such termination, equal tothe product of (x) the Salary and Bonus multiplied by (y) one and one-half(1.5).  If a payment is made to theExecutive pursuant to this paragraph (c), in no event shall the Executivereceive any payments pursuant paragraph (b) of this Section 9. To theextent that such amounts are in excess of the amount allowable as a deductionunder Section 280(G) of the Code, or are subject to excise taxpursuant to Section 4999 of the Code, the Company will gross-up anyadditional amounts due, and all non-vested options to purchase shares of CommonStock granted under the Plans shall vest on the Termination Date and allrestrictions on Common Stock purchased by the Executive under the Plans shall,subject to applicable securities laws, rules and regulations, lapse on theTermination Date.

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## (d)           Resignation.The Executive shall have the right to terminate this Agreement and hisemployment with the Company upon fourteen (14) calendar days prior writtennotice to the Company. Except if the Executive’s resignation is for Good Reasonin accordance with paragraphs (b) and (c) above, from and after theeffective date of such resignation, the Executive shall (i) have no rightto receive any further Salary or bonus hereunder; (ii) cease to be coveredunder or be permitted to participate in any Benefits (except payments due theExecutive or the Executive’s beneficiaries or representatives under anyapplicable pension, profit sharing, life or disability insurance plans orpolicies); and (iii) forfeit any and all non-vested options granted ornon-vested Common Stock purchased under the Plans.

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## (e)           Definitions.For purposes of this Section 9 the terms listed below shall mean thefollowing:

 

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### (i)            “Changein Control” shall mean:

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#### (a)           thedirect or indirect acquisition, whether by sale, merger, consolidation, orpurchase of assets or stock, by any person, corporation, or other entity orgroup thereof of the beneficial ownership (as that term is used in Section 13(d)(l)of the Securities Exchange Act of 1934, as amended, and the rules andregulations promulgated thereunder) of shares in the Company which, when addedto any other shares the beneficial ownership of which is held by the acquiror,shall result in the acquirer’s having more than 33% of the votes that areentitled to be cast at meetings of stockholders as to matters on which alloutstanding shares are entitled to be voted as a single class; provided,however, that such acquisition shall not constitute a Change of Control forpurposes of this Agreement if prior to such acquisition a resolution declaringthat the acquisition shall not constitute a Change of Control is adopted by theBoard with the support of a majority of the Board members who either were membersof the Board for at least two years prior to the date of the vote on suchresolution or were nominated for election to the Board by at least two-thirdsof the directors then still in office who were members of the Board at leasttwo years prior to the date of the vote on such resolution; and providedfurther, that neither the Company, nor any person who as of the date hereof wasa director or officer of the Company, nor any trustee or other fiduciaryholding securities under an employee benefit plan of the Company, nor anycorporation owned, directly or indirectly, by the shareholders of the Companyin substantially the same proportions as their ownership of shares of theCompany shall be deemed to be an “acquirer” for purposes of this Section.

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#### (b)           theelection during any two-year period to a majority of the seats on the Board ofDirectors of the Company of individuals who were not members of the Board atthe beginning of such period unless such additional or replacement directorswere approved by at least 80% of the continuing directors.

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#### (c)           shareholderapproval of a plan of complete liquidation of the Company or an agreement forthe sale or disposition by the Company of all or substantially all of theCompany’s assets.

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### (ii)           “GoodReason” shall mean the occurrence of (a) a material breach of thisAgreement by the Company or (b) the failure of the Company to continue to providethe Executive with salary and benefits substantially similar to those describedin this Agreement, or to continue in effect any benefit or stock option planwhich is material to the Executive’s compensation, including but not limitedto, the Plans, or the failure to pay the Executive a Bonus pursuant to theterms and subject to the conditions of Section 4(a) hereof; provided,however, the Executive shall not be deemed to have Good Reason to terminate hisemployment until such time as the Company shall have received notice of theExecutive’s intent to terminate his employment upon the occurrence of an eventset forth in (a) or (b) above, the nature of such event(s) and theCompany has been given thirty (30) days to remedy such events.

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# SECTION 10.    AUTHORITY.The Executive represents and warrants that he has the ability to enter intothis Agreement and perform all obligations hereunder, and that there are norestrictions on the Executive or any obligations owed by him to third partieswhich are reasonably likely, in any way, to detract from or adversely affecthis performance hereunder.

 

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# SECTION 11.    MISCELLANEOUS.

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## (a)           SeparateAgreements. The covenants of the Executive contained in this Agreementshall survive any termination of this Agreement and shall be construed asseparate agreements independent of any other agreement, claim, or cause ofaction of the Executive against the Company, whether predicated on thisAgreement or otherwise. The covenants contained in this Agreement are necessaryto protect the legitimate business interests of the Company.

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## (b)           EntireAgreement. The parties hereto acknowledge and agree that this Agreementsupersedes all previous contracts and agreements between the Company and theExecutive relating to the subject matter hereof and that any such previouscontracts or agreements shall become null and void upon execution of thisAgreement. This Agreement constitutes the complete agreement among the partieshereto with respect to the subject matter hereof and no party has made or isrelying on any promises by any other party or their respective representatives notcontained in this Agreement.

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## (c)           Severability.If any provision of this Agreement is held to be illegal, invalid orunenforceable under present or future laws, such provision shall be fullyseverable, this Agreement shall be construed and enforced as if such illegal,invalid or unenforceable provision had never comprised a part of thisAgreement, and the remaining provisions of this Agreement shall remain in fullforce and effect and shall not be affected by the illegal, invalid orunenforceable provision or by its severance from this Agreement. If anyprovision of this Agreement is held to be unenforceable because of the durationof such provision, the area covered thereby or the scope of the activityrestrained, the parties hereby expressly agree that the court making suchdetermination shall have the power to reduce the duration and/or areas of suchprovision and/or the scope of the activity to be restrained contained in suchprovision and, in its reduced form, such provision shall then be enforceable.

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## (d)           Successorand Assigns.

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### (i)            ThisAgreement is personal in nature and neither this Agreement nor any rights orobligations arising hereunder may be assigned, transferred or pledged by theExecutive. This Agreement shall inure to the benefit of and be enforceable bythe Executive’s personal or legal representatives, executors, administrators,successors, heirs, distributees, devisees and legatees.

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### (ii)           ThisAgreement shall be binding upon and inure to the benefit of the Company andtheir successors. The rights and obligations of the Company pursuant to thisAgreement are freely assignable and transferable by Company without the consentof the Executive without his being relieved of any obligations hereunder,including, without  limitation, anassignment or transfer in connection with a merger or consolidation of theCompany, or a sale or transfer of all or substantially all of the assets of theCompany; provided, the provisions of this Agreement shall be binding on andshall inure to the benefit of the surviving business entity or the businessentity to which such assets shall be transferred and such successor shallexpressly assume and agree to perform this Agreement in the same manner and tothe same extent that the Company would be required to perform it if no suchtransaction had taken place.

 

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## (e)           GoverningLaw. This Agreement shall be governed by and construed in accordance withthe laws of the State of New York, without regard to the conflict of law rules thereof.

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## (f)            Amendment.No amendment, waiver, modification or change of any provision of this Agreementshall be valid unless in writing and signed by both parties; provided, that anysuch amendment, waiver, modification or change must be consented to on behalfof the Company by the Board. The waiver of any breach of any duty, term orcondition of this Agreement shall not be deemed to constitute a waiver of anypreceding or succeeding breach of the same or any other duty, term or conditionof this Agreement.

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## (g)           Notices.All notices and communications under this Agreement shall be in writing andshall be personally delivered or sent by prepaid certified mail, return receiptrequested, or by recognized courier service, and addressed as follows:

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### (i)                                     Ifto the Company to:

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American Bank Note Holographics, Inc.

2 Applegate Drive

Robbinsville, NJ 08691

Attention:   Chief ExecutiveOfficer

Telephone: (609) 632-0800

Facsimile: (609) 632-0850

 

with a copy to:

 

Fulbright & Jaworski L.L.P.

666 Fifth Avenue

New York, NY 10103

Attention: Paul Jacobs, Esq.

Telephone: (212) 318-3000

Facsimile: (212) 318-3400

 

### (ii)                                  Ifto the Executive to:

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Mark Bonney

12 Vincent Avenue

Old Saybrook, CT 06475

Telephone: (860) 395-0833

Facsimile: (203) 286-2098

 

or to suchother address as may be specified by notice of the parties.

 

## (h)           Counterparts.This Agreement may be executed in counterparts, each of which will be deemed anoriginal but all of which will together constitute one and the same agreement.

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## (i)            Effectiveness.  As a condition to the effectiveness of this Agreementthe Executive shall have resigned from the Board of Directors of the Company.

 

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IN WITNESS WHEREOF, the parties hereto have executedthis Agreement as of the date first above written.

 
|   | AMERICAN  BANK NOTE HOLOGRAPHICS, INC. |               |
|--------|----------------------------------------|--------------------|
|   |                                   |               |   |
|   |                                   |               |   |
|   | By:                                    | /s/  Kenneth Traub |   |
|   |                                   | Name:              | Kenneth  Traub |   |
|   |                                   | Title:             | President  and CEO |   |
|   |                                   |               |   |
|   |                                   |               |   |
|   |                                   | MARK  BONNEY       |   |
|   |                                   |               |   |
|   |                                   |               |   |
|   |                                   | /s/ Mark Bonney    |   |

 

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